Boards and digital governance

The economic bounce-back we have seen over the past few months is, in part, because companies have been able to conduct commercial operations remotely. For many, this transition, along a digital path, has happened much earlier and faster than they might have planned but is not yet complete. This gives company boards the opportunity to pause and review their digital governance framework. They need to ask whether the company has a digital governance structure and, importantly, checks and balances in place. If it does, this is an appropriate time to review these; if not, it is time to put these in place.

Digital governance concerns itself with establishing a framework or rules for laying down or smoothening a company’s digital presence. Lisa Welchman, a pioneer in digital governance, has defined digital governance to be a “framework for establishing accountability, roles, and decision-making authority for an organization’s digital presence. This will include its websites, mobile sites, social channels, and any other internet and web-enabled products and services”.

She has also identified three elements on which digital governance rests: Digital strategy, digital policy, and digital standards.

Digital strategy is deciding what the business hopes to achieve through its digital presence. Like traditional business strategy, it begins with scoping the competitive landscape and how this may change. Companies need to identify areas to focus on, pockets to invest in, and finally bring a high degree of attention on execution. There is one fundamental difference, namely scale. By its very nature, the constraints that might otherwise hold a business back — for example, opening one branch at a time — no longer apply. So, the greater challenge is to be able to think big and identify the customer’s pain points (digital KYC) that can now be addressed online. But make no mistake — in the end, strategy is about growth, market share, profits, and margins. 

Digital strategy is relevant not just for start-ups and e-commerce players, but all companies. Think of how rapidly banks, insurance firms, or brokerages have grown since they established an online presence, or business avenues created by social media platforms like Instagram or Facebook for beauty products, where users can post photos in addition to more formal adverting. Today, even auto companies are using technology extensively — not just for creating awareness or sales, but at each stage of their operations, be it supply chain or distribution and reach.

As the dividing line between work and personal is getting blurred (think about the last time you hired people without trawling their digital presence — unmindful of the fact that a lot of what was posted may have been about their own personal time), it is imperative that companies have robust digital policies — from who gets to select the content management systems, to what content goes on the home page, to data privacy, to the presence on the social media, to accessibility, security or the website’s terms of use. Some parts are subject to endless conversations, so building guardrails through policy is important as it clarifies expectations and brings predictability.

As in the “physical world”, the documentation should be as clear and there is a strong case to have it in the vernacular. The policies should be periodically refreshed to make sure these are up-to-date and in line with the requirements of current businesses and laws. Unlike earlier times, when such policies were filed away or displayed in the lunch room, today, with the intranet and other digital solutions, these are accessible to everyone inside — and even outside the firms.

The third leg is digital standards. As in the physical world, there are product specifications and standards that can be extended to an organisation’s digital avatar. These standards help specify the quality of an association’s digital presence and assist in defining the overall user experience — be it the website, the site search, the information architecture, the customer support, and a whole lot more.

Boards have been diffident in getting their arms around all things digital. This reluctance may be because the internet was not something many of today’s board members grew up with and partly because the technology teams speak in a language that only the techno-cognoscenti can make sense of. But boards can no longer afford to be reticent in asking questions. To push for stronger digital governance, they must begin with these: 1. Does the company have a digital strategy and ask for it to be articulated? 2. Reviewing the digital policies 3. Evaluating the digital standards and 4. Asking if the company has the capability for transforming itself and, in this context, identify or establish who will lead these efforts. Given the shift that’s underway, boards have no option but to insert themselves into this conversation.

The writer is with Institutional Investor Advisory Services. Views are personal. Twitter: @AmitTandon_in